SERGEY TSUKHLO: “RUSSIAN INDUSTRY RECOVERS FROM MARCH RECORD DROP”
Sergey Tsukhlo, Head of Business Surveys Department of the Gaidar Institute, shared the results of the industrial enterprises surveys, which noted a surge of optimism in April, in a commentary to Nezavisimaya Gazeta.
"The optimism index rose in April contrary to pessimistic expectations after a record-breaking dip in March," said Sergey Tsukhlo.
"In April, the balance of the enterprises production plans showed an undoubtedly surprising increase of 30 p.p. after a fall of 50 in March. As a result, the indicator has turned positive, meaning that industry is ready to switch to increased production as early as May-June." "A similar surge of optimism was also recorded in May 2020, when a surprisingly successful rebound began from the viral crisis pit," the Gaidar Institute expert recalled.
Meanwhile, Sergey Tsukhlo pointed to the negative balance of estimates of finished product stocks that has persisted in the Russian industry since August 2020. Enterprises fear that “aggravating challenges related to availability of raw materials, supplies and components may result in a halt in production even if demand continues.”
However, it is the rise in the composite optimism index, which takes into account a range of factors, not just stocks, “demonstrates the desire of Russian industry to rid officials and analysts of depressed sentiment as quickly as possible,” the economist said. "If enterprises manage to solve the problem of 'falling-out imports' in providing production with raw materials and components, restore pre-crisis investment plans and cope with inflation expectations, Russian industry will once again be able to surprise outside observers," Sergey Tsukhlo concluded.
"In April, the balance of the enterprises production plans showed an undoubtedly surprising increase of 30 p.p. after a fall of 50 in March. As a result, the indicator has turned positive, meaning that industry is ready to switch to increased production as early as May-June." "A similar surge of optimism was also recorded in May 2020, when a surprisingly successful rebound began from the viral crisis pit," the Gaidar Institute expert recalled.
Meanwhile, Sergey Tsukhlo pointed to the negative balance of estimates of finished product stocks that has persisted in the Russian industry since August 2020. Enterprises fear that “aggravating challenges related to availability of raw materials, supplies and components may result in a halt in production even if demand continues.”
However, it is the rise in the composite optimism index, which takes into account a range of factors, not just stocks, “demonstrates the desire of Russian industry to rid officials and analysts of depressed sentiment as quickly as possible,” the economist said. "If enterprises manage to solve the problem of 'falling-out imports' in providing production with raw materials and components, restore pre-crisis investment plans and cope with inflation expectations, Russian industry will once again be able to surprise outside observers," Sergey Tsukhlo concluded.